Highest level since 2006. So were going back an additional year than what we have been looking at recently. 2year is down 5. 18. The 10year note is yielding 4. 8 and the 30year has ticked a little higher at 4. 95. Meantime President Biden landing in israel early this morning and met with israeli Prime Minister Benjamin Netanyahu. Nbcs jay gray joins us this morning from tel aviv. Jay. Reporter hey, there, good morning, guys. Yeah, the president meeting with Benjamin Netanyahu as you talked about and later today with the war council. Who hell not be meeting with is his arab allies. There will be no trip to jordan. That was something that was planned there. That was considered a pretty important part of the visit in that the president had hoped to talk about tamping down concerns that are growing right now over this becoming a much wider military conflict. You know theyre already growing escalation alord the border of lebanon. There have been casualties of soldiers on both sides. Israel and hesitazbollah on the border there and troops moving in more equipment. Thats a big concern regionally and something the president had hoped to discuss. He plans to make phone calls with those who had planned to be part of the summit on his way back to washington,but, again, no facetoface meeting. Thats the result of a hospital explosion overnight that left hundreds dead. Youve got hamas blaming israel saying it was an air strike that caused the blast and israel saying it was a failed rocket launch by the Islamic Jihad that caused the deaths of hundreds there. Its really changed the perception of not only here but worldwide and thats something that has changed the president s visit as well. He was also planning, guys to really focus hard on humanitarian aid for those in gaza, those who havent had any food, water, medical deliveries in the better part of two weeks. It will be interesting to see how that plays out in light of all thats going on right now, but the white house has said repeatedly that every conversation he had, every stop he made was going to be dealing in some way with that humanitarian aid, and now that like so much is in limbo right now here. Jay, we appreciate your reporting as always. Im sure were going to be talking to you a lot over the next coming days. Thank you. Well get more understanding of this united story. United Airlines Shares are over. 365 this time. It was 30 cents above estimates. Revenue is in line with expectations, but the airline warned, a, more expense jet fuel, up 20 since midjuly, and the fuel bill is going to increase by 11 , the company says, in the next quarter, but also a halt to flights to israel and there may be more thats going to eat into profits. 1. 50 to 1. 80 and thats versus estimates of 2. 06. 2. 46 in the year ago period. Were going to talk to scott kirby at 7 45 a. M. Eastern. The reason im thinking about it, there are signs of some softening domestic travel, and im just wondering overall i know the retail number was good. It still seems like things are good. Were going to talk to procter and gamble to see if trade is down. We had the delta ceo last week, and he talked about some of the same concerns, the jet fuel cutting into thing, cutting into their profits. When we asked him very specifically are you seeing signs of weakness in u. S. Travel, he said no, because i was trying to get to that same point, is this something we need to worry about from a domestic fi picture. The internagtional flights are some of the more profitable ones. The big carriers with International Travel are more expensive and much more profitable flights. If youre talking about some of those shutting down, my thought is are you seeing americans not wanting to travel to international places, not just tel aviv . United has the biggest exposure to israel, and this will cause capacity to go down. As a result, that is going to be higher costs when you have less capacity. Fixed costs go up when youre flying less. All those things are well talk to scott kirby about it a little bit later. In the meantime Chesapeake Energy has approached Southwestern Energy about a possible acquisition. If the companies combine, they would form the largest natural gas focused exploration and Production Company in the United States by market value, passing that of eqt. You can see the shares are up just slightly from both of those companies, chesapeake by a few cents, southwest energy by about 1. 25 . Apparently theyve been in talks potentially for months. Theres been interest in this for months and shares of southwest Energy Jumped significantly on this news. Carl icahn has sued the board of directors. He told the Investor Conference in new york yesterday the lawsuit pertained to illuminas access to grail. We talked about that transaction for a long time, in part because of the ftc regulators around the world were looking at that. They purchased grail despite opposition. Icahn pursued it. He fought to keep grail. He said they would divest grail if it doesnt win the legal challenges. The former ceo or what was is also a member of disney, effectively ousted, pushed out by carl icahn. Right. Carl all along has been opposed to this deal, has been very angry about it. Its just an interesting move. He got him out. Where does the lawsuit take you . Is Steve Mcmillan there now . He used to be at striker. Yeah, he used to be at striker. Ill have to take a look. Remember, we have i dont think its this one, though, is it . Jacob chasen. Is he on the board or am i making it up . Hes on the board but hes running another company. I might be confusing that. We had him on talking about that. Its not striker logic. An update right now on the 7. 8 billion on a hospital did by Choice Hotels of wyndham. They reviewed the proposal and felt it was not in the best interest of shareholders. It involves a regulatory timeline and the outcome would be uncertain. Its also concerned about leverage levels. Yesterday the ceo of choice told us that they took the offer public after six months of negotiations because wyndham broke off the top. Wyndham said it has discussed concerns with choice but were unwilling to propose any mitigations to address those concerns and thats why wyndham rejected the offer. You can see Wyndham Hotel shares down by 74 cent. When we come back, jim jordans first speaker vote fails but he tries again later this morning. We get the latest from jake sherman of punch bowl right after this. Former speaker khem joins us live from washington. Youre watching squawk box, and this is cnbc. Personalized Financial Advice from ameriprise can do more than help you reach your goals. I can make this work. It can help you reach them with confidence. No wonder more than 9 out of 10 of our clients are likely to recommend us. Ameriprise financial. Advice worth talking about. Mlb chooses tmobile for business for 5g solutions. To not only enhance the fan experience, but to advance how the game is played. Nows the time to see what americas largest 5g network can do for your business. The power goes out and we still have wifi nows the time to see to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Welcome back, everybody. The house is expected to vote again today to elect a new speaker after congressman jim jordan fell short in the first ballot. Joining us with the latest is punchbowl news cofounder jake sherman. Hes also an nbc news and cnbc contributor. Any idea whats going to happen today . I dont think jim jordan is going to make it. Its plainly obvious for those paying attention in the capital, to be honest with you. The big question is does he go the third round. You have 20 opponents on the first round. Hes expected to have more than 20 on the second round. Some of his supporters only committed to a first ballot vote for jim jordan. Where do we go from there . If he goes to a third ballot, i think hes going to bleed a lot more support. Thats the reality. The next question is this. Does the house move, and i think they will, and we reported this this morning in our a m edition that it will move to install Patrick Mchenry as the speaker until the end of 2023 or sometime in 2024. The question is will democrats support that . They will be needing to support it because a lot of people on the right are not going to like that. Then the larger question and this is a question you will probably have for Kevin Mccarthy when hes on your show later, does he try to make a comeback . I dont think he i think he would struggle, to be honest with you, to get the support he needs to become speak e again. All of these are open. Its absolute chaos. The larger question becomes how do they put this back together again . The congress is deeply, deeply divided. Et a lot of bad filings, division among the republicans right now. I think one of the craziest tidbits i read in all of this came through axios, kind of quoting what happened on cnn. They pointed to representative kennebunk who voted for House Majority whip tom emmer in this. He was the only republican to vote to oust mccarthy as speaker while also opposing jordan on the first vote, and cnn spoke to him and said do you really want emmer for the job . He said, no, i dont. I dont like tom emmer. I figured this would be the worst job in the world. Mike roe maybe would do it for the tv show worst job in america. I dont think theres anybody on either side of the aisle whos going to be able to do it within their own caucus. It doesnt matter who you are. You cant do it if youre Hakeem Jeffries. You cant do it if youre any of the republicans at this point. Its going to take a bipartisan coalition. At this point it probably will. I dont think theres any single republican who could get 217 votes to get the job on their own. To put it in context, thats stunning. That never happens in the house of representatives almost always, going back 100 years. People get elected to the speakership with their party and their party only. Theres not a single republican who i can think of that will get 217 or 218 depending on the attendance on their own including Patrick Mchenry. Hakeem jeffries has helped to get 212 democrats on his side. 217. Nope, nope, nope. When hell freezes over. Its not going to happen, i agree. Heres what i was thinking jake. Lets say you did a vote count. Jordan missed 20. What was mccarthy was eight, right . Youve got gaetz and the over seven. Eight is better than 20. So he had 96 . If it was purely just percentages, he might be considered to be able to wrangle the most, but still be missing eight. Any way that you could shear off nancy mace, i dont know what her thing was. She must want to be president. They get criticized so much. Maybe that would it seems like mccarthy has more support than jim jordan. Mccarthy has infinitely more support than jim jordan and more people like mccarthy over jim jordanful you could definitely take two away from that. I think theres a couple of people who are softnosed on mccarthy, and after three weeks of doing this, i think you could probably eat away at his opposition. I dont know that you could get four. The larger question is can mccarthy cut a deal with democrats to take away this emotion debate gate which is an anvil hanging over his head because thats the only way he can survive. I dont know the answer to that, quite honestly. The democrats have not been willing to cooperate. Listen, i will say this to everyone. Mccarthy knows this. This is his fault in that he let this provision stay in place when he was negotiating back in january. He knew it would happen to him at some point and he knew, quite honestly, he wouldnt be able to beat this back. The only way i could see mccarthy wanting to be speaker is to get rid of the motion of eight. Yes, this is the system of governance we have right now, joe, is that eight republicans in a narrow majority. Six republicans, five republicans could boot the speaker out of the job and make it difficult for the 96 , 97 of the conference. Ive seen another place do that. You get a certain amount of chips to bet on whos going to get the nomination or whatever. I mean how would you do it right now . To be the eventual speaker . I would say mccarthy gets at least 33 chance maybe and then jordan probably youd probably give less to jordan. What about Patrick Mchenry . He probably doesnt even want it. Steve scalise is out of the picture. Is there somebody else were not thinking about . Patrick mchenry doesnt want it that no one wants this job. Its like someone said the other day, its like being mayor of a city that was just nuked. Youve got 100 bucks. What do you do . Youve got 3 1 odds. Mchenry. Mchenry . Until the end of the year or until january. To me, i would add one thing here. I think mccarthys opposition has probably grown beyond that eight, to be honest with you. A lot of people have gone soft on mccarthy. Yeah, probably, but you could peel off a couple, youre right, but then you probably get back to eight. The original eight, but then you have to add some in. Thats right. Jake, thank you. Thanks, guys. Coming up, the survey on the u. S. Economy. I think its all americans all america. All america. Yes. Meaning all of america. Not the athletes. Yep. Anyway it involves plus were going to have a huge lineup including the ceos of Procter Gamble. You know how you call former House Speakers speaker, i dont think we want to call mccarthy speaker today. We call him congressman. Former speaker. Former House Speaker Kevin Mccarthy, and senator and president ial candidate tim scott has some interesting things c. Erening there with his sup pa well ask him about it. Squawk box will be right back. And im axel, proud to be her state farm agent. Her baking superpowers have brought sweetness to our community. I make delicious cakes to make special occasions even better. Maria doesnt just bake; she also creates opportunities. Small businesses like marias, open doors for communities to thrive. Support your community. Support small business. [soldier] take a look at this theyve left us a gift. [soldier] i think we misjudged them. I love horses. birds chirping [soldier] we should open the gate. Lets see what charlotte thinks. [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. We stop cyberattacks. We stop breaches. We stop a lot of bad things from happening. Crowdstrike. Protection that powers you. I promise as an independent advisor to put the Financial Wellbeing of you and your family first. I promise to serve, not sell. I promise our relationship will be one of partnership and trust. I am a fiduciary, not just some of the time, but all of the time. Charles schwab is proud to support the independent Financial Advisors who are passionately dedicated to helping people achieve their financial goals. Visit findyourindependentadvisor. Com allamerican survey showing attitudes toward israel. Also new numbers on President Bidens approval ratings. Steve liesman joins is now. Pretty serious stuff. The americans strongly supporting is rah i will is over palestinians and the military for israel, but a significant share want both sides treated the same, and cnbc finding support for President Biden at or near alltime lows. 39 say us raamericans should favor ids israelis. 36 want both sides to be treated the same. A significant number say theyre unsure, a sign that remains fluid. Democrats say the go. Should favor israelis. Look at that number there. 57 of republicans want the u. S. To favor israel over palestinians, 44 of democrats want both sides to be treated the same, and that includes 47 of democrats with just a quarter of republicans jo on the issue of government funding, 74 say military aid for israel is an important priority for government funding. 72 for securing u. S. mexican borders and 72 for foreign human taurean aid. Come down a little bit, 51 for military aid for ukraine and 52 for economic military aid for taiwan. Us real is the third spot there. The survey of a thousand americans across the country finals that economic and geopolitical turmoil have cost President Biden support, in some cases significant. His overall approval rating, 37 , his disapproval, 58 . Thats the highest of his presidency. On the economy, 32 approving. That is the lowest of his presidency with 63 disapproving, 31 approving on his Foreign Policy handling and 60 disapproving. Among the president s problems, just 66 of his own party approves of his handling of Foreign Policy along with a slim 20 of independents and 7 of republicans, all of this leading the ur is vai to find former President Trump would bead President Biden in a headtohead race by four points, 46 to 42 with 12 unsure. Were going to have full coverage, guys, with americas news on the economy including an indeafth look with whats troubling americans. Well have that on friday. Wow. It took you a while to get to the last one. I dont know if thats a lede or not. Crazy. What u did notice there, steve, was in gin real, both parties are kind of in sync on israel, ukraine, but there are significant differences. Americans definitely more comfortable giving aid to israel than ukraine. They dont care about the southern border . Their number is below it. Joe, you know, one can look at these numbers and say, wow, these are tremendous differences, or one can look at these numbers and say, you know what . This could be the source of a compromise. Thats what i mean. In general. But there are differences. In general, everybody wants to help ukraine and israel and probably do the border, but there are significant, like 20point differences. Right. Joe, i want to make one comment on the trump numbers. I want to make one comment real quickly, which is both are republican and democratic pollsters. One thing they can say for biden, given how lousy his approval numbers, its hard to believe trump has only a fourpoint lead. Yes and no. Im just saying. Think about what were talking about. Think about what were talking about. Its the battle of the lower negative in the situation. The lower negative. Trump has his own problems, but given these numbers, you would think trump could have or the republican contender could have a much stronger lead. Theres two ways of looking at it. Youve got a guy where we dont know which of the five trials some are starting here, some are starting there, and hes still somehow up. Its so bad for biden when you have a guy who might be no doubt. I dont know where he could be. He could be incarcerated. I dont think so, but its possible. Its so bad for biden that hes still up four points. Right. You could look at it that way for sure. All right. All right, leis maniacs, theyre satisfied. They got their fill. See you later. Coming up, coalition of colleges speaking on support of israel. Were going to talk to one of the coalitions founders. Were going to do that next. Good morning, everybody. Welcome back to squawk box. Were live from the Nasdaq Market site from times square. Weve been watching the futures. Dow futures now down by about 128 points. S p futures are off by 20. The nasdaq indicated down by 83. Andrew . Meantime a coalition of colleges and universities coming together in support of israel against hamas. The coalition includes faithbased schools, historically black colleges. Joining us right now is the founding signatory rabbi ari berman. Good morning. Good morning. Thank you so much for having me. Tell us about the effort in the context of what were seeing around the country frankly at universities. I fear it may be underneath the surface even as Companies Given the World Business Network Going on and the conversation about donations to these universities and the like. But lets start with what this really is aimed to do. Sure, sure. Theres definitely a controversy on College Campuses now with College President s. Some people think that College President s should. Say anything about any issue. Others think theyve spoken too little about this issue. So let me give you a little insight on what College President s think as a College President and someone who speaks regularly to my colleagues. College president s are concerned about their jewish students and their muslim students, and theyre concerned about roiling their campus. So what weve dub with this broadbased coalition by supplying the statement is to give them a tool. We call it the truth. And the truth has two elements to it. The first is that hamas is a terrorist organization. This is an organization Whose Mission statement is to destroy the jewish state and kill the jewish people. You know, moo i wife, whos back in israel, just told me the story that one of our neighbors volunteered to perform to be part of the last rights of a ritual, burial ritual with their last rights and she volunteered for the victims of the south and she just told my wife that you cant believe the state of the bodies. That i didnt just rape the whims. They brutalized, butchered, decapitated children, burned children alive. The salvvagery, the likes of wh we havent seen since the holocaust. This is an expression of hamas. Theyre not interested in the twostate solution. Theyre interested in the final solution. The first truth is hamas is a terrorist organization. The second truth is that the palestinians are not hamas. This is essential. The palestinians are not hamas. The palestinians are the ones dying now. This is where things get complicated. We heared from Steve Liesman. Its not just College Campuses or corporations. The survey that he just ran on all america shows that 36 favor israelis over the palestinians. Or 36 want them treated equally. 39 want israelis. Thats a public perception. What do you do . For me its important to differentiate because the palestinians like all our arabs and muslims hamas is evil. I came back from israel, they have an abraham statehouse, a family house. They invited the president s of the jewish universities to speak. After we met with a very highlevel official, iranian official, he told me that he was in michigan during 9 11 and his father called him and said to him, you need to come home. And he said, why do i need to come home . He said, because theyre going to turn on you. He said, im not a terrorist. He goes to class. He said the class raged against him. There were two women who stood up for him and they were two jewish women. He said from that point and on he had a real affection for the jewish people. What it my lights for me is the importance of separating people rabbi, the question i have about universities in the u. S. , your people on the campuses of the university of pennsylvania, for example, i saw it yesterday, a video of somebody literally screaming out genocide to the jews. Genocide to the jews. This is happening in the United States that theyre saying this out loud. It has been normalized. Then the question is in a world where universities are talking about having freedom of speech and iit that in the context of hate speech clearly, do those students deserve to remain students at that school . Are they supposed to be expelled . Is the University President supposed to actually speak out and say we cant have this . What is supposed to happen . Its great. Thank you. The University President is certainly supposed to speak out. This is essential, and this is missing. This little piece is sometimes missing in the conversation. Campuses need to be bastions of free speech. But free speech needs to be built on the truth and sometimes the truth is ununequivocal. We read last week god said let there be light and there was light. Sometimes you have to speak and create the light. Would you support expelling the students . Do you support the lawmaker that has rescinded job offers to students who participated in some of these protests . Do you support the view that he should be able to dough side whether he wants to hire or not hire the Harvard Students who signed on to those letters . What is that answer because that is the thing that so many people watching you right now are trying to figure out the answer to. Theres no question that the world notices when people support baby killers, theres no question about that. What where were coming with this statement is to help give a tool to calm waters down on College Campuses and to enlighten. Thats really what is key. What inspires my work is Martin Luther king. When he says darkness cannot draw out darkness, only light can. Hate are students supposed to be able to say those things on campus . What were supposed to do is bring the education, teach first our basic training. Hamas is a terrorist organization. No one can support that. Im not disagreeing with you. You know where i stand. Im asking you whats supposed to happen to the students and the president of the university of pennsylvania, which, by the way, when i look at the situation, i think to myself, your entire job is to get donations, frankly, from the alumni. The whole of economics breaks apart when a lot of the wealthiest donors say im closing my checkbook to you. I dont understand how thats a long item tenable situation to the yuniversity. Do you . What im happy to share with you and you see this in the broadbased coalition, my peers are willing and able to do it. The moral courage that they have, if you look at my Coalition Partners all across this country, and we have already people signed up from california, texas, and new york, all different states, the public and the private, hbcus, we all come together to establish that hamas is a terrorist organization that we condemn and the palestinians are not hamas. Ive got to ask you to level with us straight, though, on what were seeing. What i specifically said to you about the university of pennsylvania, i want your actual opinion, your personal opinion. Should the president of that University Still be the president of that you vernts . Should the students who said on the campus genocide to the jews still be a student of that university . Its a yes or no question . You know, where hamud is we dont do yesorno questions. It is true that there needs to be consequences for people that are bad actors, theres no question about that. And each University System has to think about what those consequences are. Right. For me, whats more important because i dont think theyre bad actors. In many cases i think theyre misguided and misinformed. If we bring the light of education to it, we can actually create a base on which intellectual real conversations can happen. Do you think this is new, or do you think this has been underneath the surface for a very long time . And do you think this is a problem at universities or a problem throughout the country and this world . Its not just this country i think its worse in other parts of the world. How does someone who feels empathy for the palestinian cause, how do you express that and not support a terrorist organization . They have nowhere its almost like do any of these students are they walking a fine line between not supporting hamas and trying to have empathy for the palestinians . Thats whats essential. We need to differentiate. This one big demonstration they dont have their own demonstration. To that point, im a University President. I have to say, i know University President s shy away from making collective statements. This is an opportunity to have a broadbased coalition across the country. Its an Inflection Point not just for the state of israel. This canan Inflection Point for Higher Education in our entire society. We can wrap around the basic truth, which will be the bedrock of future intellectual conversations that hamas is a terrorist organization and hamas is also the elected leadership in the palestinian territory. Not anymore. Elected leadership. But they were originally. 70 of the palestinians do not want hamas ruling gaza. Mohammed abbas himself said they do not represent them. We need to separate that and understand, and the College President to do that, because that will enable their whole campus to come together. The campus is roiling. They can set the tone. Were going to run out of time. I have one final question. For ceos listening to you do you put out a statement . Not put out a statement . Some of this has become politicized. Theres a concern they could put out too many statements after george floyd was issued and lgbtq issues. Now and i find it disgraceful theyre not willing to put out statements about this. The question is with the university of chicago a lot of ceos are maybe thinking i shouldnt do it or do you think essential truths supposed to be spoken about. On moral issues, are they always clear . On this one i would say its clear. Should actually leaderss be putting out statements across the board . Some statements are critical. We need to be puts statements on t these truths. I believe ceos, colleges should look at our staumts, take it, adopt it, use it for their companies. I would love all ceos to take it, cut out president s of universities, all should stand in support of israel and the palestinians suffering under the cruel rule of hamas in gaza. Tnk you for coming in this morning. Appreciate it. Thank you. Squawk box returns after this. aidyl hi, im aidyl, and i lost 90 pounds on golo. I struggled with weight loss and weight gain my entire life. With all the yoyo dieting i did in the past, i would lose 20, 30, 50 pounds just to gain them over and over again. Thanks to golo, ive been able to steadily go down the sizes in my closet and keep the weight off. For the first time in forever, i feel in control. announcer change your life at golo. Com. Thats golo. Com. The first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. We just got an order from dinosaur, colorado. Start an easy to build, powerful website for free with a partner that always puts you first. Start for free at godaddy. Com elon muffing is testing a 1 a year subscription model in new zealand and the philippines that he says could reduce spot usage on x, former will i known as twitter. Users will have to pay the fee to post or reply to a post. Those who opt out will only be able to read posts. Coming up, jason is going to join us to talk strategy as we continue smack dab in the middle of earnings season. Squawk box will be right back. Announcer expectation active edge is sponsored by at t business, nextlevel moments need the nextlevel network. Move to the cloud. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. I dont know what this means. The next guest says markets have been remarkably resilient give b en the market headwinds. Jason trennert is here, of strategas. It is the opposite for the bond itself. Youre surprised that the yields arent even higher than they than they are right now . No, im really surprised there has yields arent lower. Youre saying youre surprised that bonds havent rallied . Right. So the person okay, i think there would have been a flight to quality given all the things that thats not what youre saying . Its not what im saying. Okay. There should have been a flight to quality, but by the same token, wars are inflationary, and were i think were reverting back to the meme as far as buying yields. Youre not turning bullish on stocks, are you . Im more cautious. I had a reevaluation on the recession this year because i do think if i miss something, it may be just it is clear that the labor markets are much more resilient than we might have thought and that might be because were short of labor, working people, entry level workers. I just think we dont have enough of them. So, despite the fact that profits have been a little bit lower, and Profit Margins are lower, companies have been loathe to lay people off. The Unemployment Rate is at 3. 8 , youre at full employment. So it is hard to get a recession out of that. But it also is hard to control inflation. You think the relative stability youre seeing in equities is masking some underlying weakness as yet to be realized. Are we on a precipice or is this really showing the underlying fundamentals are still good . The world is i mean, i have seen jamie dimon on the set, ive never seen things more concerning, the geopolitical, the economic backdrop, it is really frightening, even more so than normal. I think hes right. I think there is a lot of things that are frightening. The thing that frightens me the most right now, from a market perspective, is bond yields and the fact that without in the absence of quantitative easing and the fed buying treasuries, treasury yields will move higher and thats because our spending is out of control, running a budget deficit that is 5. 5 of gdp at full employment. We looked over the past 70 years, we never have run a budget deficit of 5 of gdp when the Unemployment Rate wasnt above 7 . People have pointed to a lot of these concerns for quite a while. And then government steps in and does something to change it. Thats right. What would stop the fed if things get really out of control from bringing back qe . It is a great listen, we brought back qe for a short period of time after Silicon Valley bank failed. Right. When i say this, people are, like, thats not going to happen for a long time. We switched course this year. It is debatable whether i personally think it is a decent bar bet, no one would ever know, but if we let Silicon Valley bank fail, im convinced we would be in recession already. But we didnt. The fed flooded the system with 400 billion of assets, we essentially backed every deposit. How do you convince there is not one . I think the only difference now is that two things that are different, one is that inflation is a binding constraint. In many ways, i said before here, the fed is fighting the federal government to bring inflation down. If youre serious about bringing inflation down, it is hard do it if youre running massive budget deficits. Thats the first thing i would say. The second thing i would say is that interest expense on the debt is now spiraling out of control. So, again, the fed could step in and buy treasuries, as they have done before, but it is Something Else will pop out some place else and handle the inflation. There is nothing stopping the fed from doing that the fed put. Pressure will be huge. It is very hard to get it all set so that you have high growth and low inflation. We have our political act together. Couple of great candidates. At least we have great leaders. The politicians are going to throw them out on from either party. Show me the next president who doesnt do that and theyll scream at me because were out of time. I feel very strongly this idea that the fed was the only game in town. I believe frankly it was unconstitutional. I think it was i think it was a great error of the fed. Theyre playing us out. There is also pickleball. There is pickleball. The only two. I see ppleoe playing. Wee. Okay. Do you play . Here in hawaii there is always time. Theres time to spend with family, time to enjoy with friends. Theres always time to listen or lend a helping hand. Here we have all the time in the world, but no time to waste. birds chirping go. And go and go and go. but what if you. Stop . You work hard, its time for a bank thatll work hard for you. Everbank brings security and a guarantee that youll earn a yield in the top 5 of competitive accounts. Going, thats what got you where you want to be. Were the partners for your next move. Everbank. Advantage, you. This is Spring Semester at fairfieldsuisun unified. They switched to google tools for education because theres never been a reported Ransomware Attack on a chromebook. Now theyre focused on learning knowing that their data is secure. good morning. Jim jordans bid for House Speaker fails, but he will try again today when the house takes up a second round of voting. Former House Speaker Kevin Mccarthy will join us live. Earnings from Procter Gamble and nasdaq are hitting the wires. Well hear from the ceos of both companies. And United Airlines says pricier fuel and war in the middle east will weigh on profits. We have the Ceo Scott Kirby joining us for an exclusive interview. The second hour of squawk box begins right now. Good morning and welcome back to squawk box right here on cnbc. Were live at the Nasdaq Market site in times square. Im Andrew Ross Sorkin along with becky quick and joe kernen who is here, back at the table. U. S. Equity futures at this hour, 118 points off on the dow right now. Nasdaq looking to open down 90 points. S p 500 also off about 20 points. Treasuries right now, tenyear, maybe should look at the twoyear, twoyear still over 5 . Now up at 5. 173 . The tenyear, 4. 824 , becky. Dow component travelers out with its earnings this morning. The numbers are a miss on the bottom line actually. Big miss actually. 1. 95 is the diluted earnings per share on core, compared to 3. 01 the street was looking for. A very big miss. However, revenue came in better than expected. It came in at 10. 6 billion and thats better than the 10. 3 billion the street was expecting. Want to know why . It is because they had very big catastrophic losses during the quarter. This is similar to what we saw last quarter. Strong numbers, strong premiums that were there, but very big loss because of some storms that took place across the United States. In this most recent quarter, they had 850 million in pretax losses from those cat losses. That compares to just 512 million in the pretax the prior year. Now, net written premiums, 10. 5 billion, up 14 over the prior quarter. Prior year quarter, i should say. And net Investment Income. This is the good story for all the Insurance Companies out there, theyre making more money when it comes to fixed income and thats been a huge issue because youre finally getting some return on those treasury bills that they buy. Ne net Investment Income up by 30 . Much bigger catastrophic losses than expected. Thats why you see the big miss. The stock is down, but only by about. 8 . In washington, jim jordans bid to become speaker of the house failing in a first vote yesterday, but another vote expected today. And Emily Wilkins is there with the latest. What is going on . What do you think the chances are . Most people think it is very little. It is not looking very good. I mean, lets just talk about the math. Jordan yesterday, he could only afford to lose four republicans. He lost 20. That was more than a lot of his allies were expecting. And, yeah, hes still trying to work folks who are holdouts trying to convince them to come on board. But at this point, folks are starting to talk about what republicans next move will be. House democratic leader Hakeem Jeffries has repeatedly offered to make a deal with republicans to get a speaker elected or get someone in the chair who can actually pass legislation. And jeffries said last night that bipartisan conversations were happening. Informal conversations that have accelerated over the last few days, my hope, now that it is clear jim jordan lacks the votes to be speaker, that those conversations will accelerate this evening. Another option gaining a lot of attention is for republicans to give Patrick Mchenry, who is currently the acting speaker, the ability to pass legislation. And this is just a temporary thing, maybe for a month or two, but that would allow the house to move on issues like israel funding and government funding. Youre seeing this idea get some traction. Former speaker Newt Gingrich came out last night in an oped suggesting that this should be the path forward. And then you saw former Speaker John Boehner actually retweet that and say, yeah, we should have empowered Patrick Mchenry to go forward. Not everyone is on board with this idea. I spoke yesterday with congressman derrick van jordan and he was not a fan at all. We should not be changing the constitution or altering powers for a constitutionally vested office for convenience. We should never do that. The house is scheduled to vote at 11 00 a. M. The second vote for speaker with jordan as the nominee. Andrew, well have to see today whether jordan winds up shrinking or growing the amount of no votes. Okay. Emily wilkins in washington, we will see. We should mention that at 7 30, former House Speaker Kevin Mccarthy will join us live right on the broadcast to discuss todays vote, the chaos in washington, and even though he says hes not in the running for the role, maybe whether hell be back in the running. Procter gamble results just out, earnings 17 to 1. 83 a share. That topped estimates of 1. 72. Revenue 21. 9 billion was also ahead of expectations, down around just under 21. 6. Joining us to break down the report, john mueller of Procter Gamble. When did you we had you on, youre the cfo for a long time. When did you take over the top spot . How long has it been . Time flies. It was announced in july of 21 and effective in november of 21. 21. Around two years. The reason i bring it up is that this looks like a good number. I want to talk organic sales. Thats what we always talk about. It looks like it is above what the forecastyou gave. Last time you were on, maybe you gave conservative forecasts or maybe youre pretty good at this. The reason im saying that, have you missed yet on a quarter since you came in . Have you posted a quarter that was below analyst expectations . No. And youre right, this is a very strong quarter. 7 organic sales growth, every category growing, personal healthcare, double digits, home care in the teens, feminine care, fabric care, hair care, laundry, grooming, high Single Digits, and you see that flow through to the bottom line. We invested significantly and continuing to build their brands and bring innovation to the market. At the same time, were able to deliver significant earnings per share growth as you said, 17 , which is 21 on a Constant Currency basis. Free cash flow productivity, 97 . We returned 3. 8 billion to shareowners. It really sets us up well. This is First Quarter of our fiscal year. And it sets us up well to deliver against our guidance and potentially deliver towards high end of that. Yeah. Maybe you can be more specific about what whether you need to raise guidance and what that the point i was getting at, and it is my hometown, i followed it for a long time, you had ag, and he was everybody thought ag was the greatest thing he left and you had, you know, a couple of guys didnt quite cut it. And then ag had to come back. Werent you cfo through there you were. There was the guy sitting there the whole time toiling in obscurity and maybe the right guy would you say the right guy was right under the boards nose at the time, john . Ive worked for four different ceos, if you include ag, two different occasions. I admire and respect each of them. They each contributed a significant amount to where we are today and the strength of our position. This doesnt just happen overnight. And but im happy that i get to contribute at an even higher level now. All right. What about i was just saying, you know, stock looks good. It looked all over. And you were on squawk box a lot and that probably didnt hurt just the whole let me ask you about the consumer. Are you seeing trading down yet . We had retail sales yesterday. Nothing are you confounded by how this is happening and how strong the consumer remains at this point . Well, i focus, as you would expect, primarily on our business and im not confounded. We have invested a lot in improving the superiority of our products and categories where performance drives brand choice. We havent seen a lot of private label progress. If you look pre and post pandemic, in the u. S. , the market share number is 16 in both periods. We have built share throughout that period, including the last quarter. If we look at volumes, as an indicator of consumer strength, the last four quarters as we took pricing, volume was four quarters ago was minus 6 and then meinus 3, a little over 1 and now the United States plus 3 and western europe plus 2 and the large enterprise developing markets like mexico, bra dzil, india, strong volume growth. That doesnt surprise me given the strength of our offerings and how they improve consumers lives. Tell me about inflation on how would you characterize it versus last quarter and versus your expectations . Its pretty much in line with our expectations. We expected about 800 million in commodity help going into the year. We still stand at about that number. On the other hand, Foreign Exchange has gotten about 600 million worse since we went into the year. Thats about a billion dollar headwind. And, of course, we have the Interest Rate headwinds that were dealing with as well. But, if you look at that in totality, and compare it to where we were a year ago or two years ago, it is a much better situation. You talked about volume, you talked about organic sales, it puts net sales at 6 , organic at plus 7 . But what about price increases . Are they sticking right now . Does that account for some of the gains you had . Will you be able to continue to do that or is that going to eventually dry up . Well, pricing did contribute 7 points of growth to the top line mix. It was a point of benefit and i mentioned one point of volume decline. Thats how you get to the top line numbers. And, you know, as i mentioned, were building share. If you look at the u. S. In the quarter we completed value share is up 40 basis points, volume share is up 50 basis points, so thats definitely indicative of all of this kind of working. For obvious reasons we dont comment on future direction of pricing, but i will tell you that were happy with where we sit currently. Jon, i can push further on that . I know you cant give us too much on it, but there are a lot of questions from investors. They want stocks where you can continue to see pricing power. Theyre worried that has run its course and most companies arent going to be able to eek much more out in pricing power. Do you feel like youre pushing up against a wall at some point, that consumers arent going to be able to continue spending more . I dont think pricing is an endless well. And were pricing just to not even fully recover commodity costs. But, there are other elements of top line growth that im very excited about. Our Innovation Program has never been stronger. Look at Something Like dawn power wash, which has grown the category, 90 since it was launched. And it has grown the dawn business 50 since it was launched. As a stand alone brand, it would be the Third Largest brand in the category. So if we can continue creating value, for consumers, through innovation, if we can continue holding costs with our productivity programs as low as reasonable, we should be in very good shape. All right, jon. Try to give you a compliment. I got nothing with sports. The reds didnt make the playoffs. Bengals in last place in the you know what i got . Travis kelce, went to the university of cincinnati. Thats all i got. Thats all i got for you. Noted. Are you a taylor swift fan . You look like a taylor swift fan. Are you a swifty . I like her music. Okay. Thats good. Youve been to the eras tour, the movie or anything . I have not. It has been a busy summer. Youre busy making p g great again, i guess. Jon moeller, hope springs eternal, bengals have on two straight. Good to have you on. Congrats. Well see you again soon hopefully. Stthanks, joe. Other stocks on the move, plus nasdaq ceo Adina Friedman on thepo i market and quarterly results. Squawk box will be right back. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Welcome back to squawk box. Im Frank Holland with this mornings premarket movers. Airline industry, shares of united down almost 5 . Almost 5 right now. Under a lot of pressure this morning despite a beat on revenue and eps. Soft guidance is weighing on the stock after united warned higher fuel costs and pause on flights to israel would hit Current Quarter profits. And Ceo Scott Kirby will be here on squawk box, with a first on cnbc interview coming up in just about 30 minutes. Moving on to the chips sector, asml falling after a miss on revenue and beat on eps. Shares down over 2 right now. However, it is really guidance that appears to be weighing on this stock. Forecast is for flat growth in 2024 with the ceo calling it a transition year. The cfo added customers are getting more cautious with orders. Shares of asml down 2 right now. All right, third, we have a possible deal in the retail space. Some movement in the retail space, vf corp. Down half a percent in the premarket. But yesterday up 14 . You see the big spike right there. It is moving higher on news activist investor engaged capital took a stake in that company. Andrew, back over to you. Okay. Coming up, Adena Friedman joins us in a couple of minutes, former House Speaker Kevin Mccarthy is going to be on the program to discuss the speaker impasse, the situation in israel and so much more. Squawk returns after this. Announcer time now for todays aflac trivia question. Where is the worlds oldest and longest boardwalk . The answer when cnbcs squawk box continues. And hes using it to send out medical bills. Good hands hospital bill for prime . gaaaaap did you just say gap . hes talking about Expenses Health insurance doesnt cover. Good thing coach prime knows about. Say it one time aflac because aflac gets you money to help close that gap now how do we get this goat outta here . whistles aflac meet one of my new homies gaaaaap get help with Expenses Health insurance doesnt cover at aflac. Com. Elephant wouldve been scarier. [ heavy breathing ] doesn[ lights buzzing ]com. [ music builds ] [ screaming ] announcer now the answer to todays aflac trivia question. Where is the worlds oldest and longest boardwalk . The answer, atlantic city, new jersey. It opened in 1870 and has a length of 5. 5 miles. Welcome back, everybody. Nasdaq Third Quarter results are in with a beat on the top and the bottom line. For a closer look at the numbers, plus the tech rally, the ipo landscape and more, we want to bring in Adena Friedman, the nasdaq ceo and chair. Good morning. Good to see you here. Great to see you guys. Look, people look at it and say, fewer companies becoming public, thats going to be bad news, but youve been working hard to diversify and thats showing up in the numbers. You had strong results that came in from some of the new things youve been branching out into, including the antiFinancial Crime unit and revenue from the index revenue, the numbers those came in really strong too. Im really proud of the team and proud of our results. We had 6 overall Revenue Growth, 9 in the solutions businesses. The highlights, 15 growth of our index business. But 25 billion of inflows in our index business over the last 12 months. And then also we had about 21 growth in our antiFinancial Crime business. Were continuing to show that we are signing a lot of new clients and clients are looking to tap into us to leverage our expertise and helping manage our crime. The money that is going into the index funds, where is that coming from . Who is your customer . Our customer is Retail Investors, primarily. Our indexes are all over the world. We have a lot of different index products, but we also have products that are listed all over the world to allow Retail Investors to invest in great names, great innovators. Youre competing with a whole new group of companies than you ever have been before. This is not like competition with the ice or the nyse or somebody else. Youre competing with real financial power players. We compete with some Technology Providers in the space. We compete with other big index providers, data and analytics businesses. But we feel like we carved out our space. Were number one, number two on pretty much everything we do across the world. Were proud of that. And i think that one of the things that our team really focuses on is how do we go a little bit further to meet our clients needs. Were bringing in new Technology Like cloud, a. I. We have our first s. E. C. Approved a. I. Driven order type that we got approved by the s. E. C. This quarter. And in Financial Crime management in particular, were really using a lot of advanced a. I. There and have a generative a. I. Capability that were introducing into the work flows this coming quarter. Tell us more about the antiFinancial Crime. We know all the time about these attacks. Your identity is getting stolen, cybercrime is out there. What does this go after . This goes after two key things. One is fraud. As you said, criminals coming in and trying to convince you to give them your money. Or actually really much more nefarious criminal networks, work and rooting out whether it is human traffickers, drug traffickers, terrorists out of the financial system. So, our technology, we pull all the data across 2500 banks to look at every transaction that occurs within those banks, to look at payee payor and use patterns and practices of behaviors to look for and root out criminals and we alert the bank as to this might be a criminal activity and they go in and investigate it. The banks are pretty good at this. The big banks. Are you helping out the Smaller Banks . We started off the business the business started off supporting the smallest banks. We have been moving up market. Now we are providing technology to the largest banks as well. But the 2500 banks we serve across north america include small credit unions, all the way up to the largest banks in the world. Lets talk about listings. Listings were down. I think 87 companies that listed in the quarter versus 98 from a year ago. Is that just the uncertainty of companies kind of looking around, waiting to see uncertain market times volatility . I think it is a tough time. If you think about investors, how do they invest in the future when they dont quite understand what the future is going to hold . I think over the summer, investors started to feel more confident and understanding how the future of the economy might unfold. And therefore they were ready to underwrite more risk and we saw some great ipos in the quarter with arm and others. But we also had about 35 operating companies go public in the quarter. Thats the number we tend to focus on. We had a 95 win rate. So were proud of that. But now were starting to see more macro factors coming into the markets again, putting a little bit more of a pause on the ipo market and we have a lot of companies in the pipeline, very strong pipeline of Companies Looking to go out, but a lot of the conversation, many of the conversations are about next year, more so than this year. How much of that is tied to the macro the geopolitical situation, how much of it is just the markets kind of peaked back in july and seemed like a great idea when things were running up and, wait a second, geopolitics is reflected in the stock prices. I think it is the markets tend to manage through geopolitical events pretty well in terms of they really do look through it and say how does this Impact Company earnings . But the Macro Economic environment and the Interest Rate environments, looking at how different economic signals are coming out, are just making it harder again for investors to predict what the future is going to hold. If you think about what is their job, it is to underwrite the future earnings of a company, hard to do that. Therefore youre starting to see them put a pause yet again on underwriting significant risk. Now, having said that, we have some really Interesting Companies that are look to tap in the fourth quarter, and assuming the market starts to demonstrate a little bit more resilience, i think well see some good Interesting Companies come out, but majority of companies are looking at next year. We talked about the things youre excited about and where youre seeing some growth. What are you worried about . What is your biggest concern . I think that i actually worry about making sure that we, number one, honestly, that we adapt to new technologies fast enough. Thats something i spent a lot of time working with the team on, how do we bring more of these emerging technologies into the company, how do we continue our cloud journey. And then the second thing, i think, is the world around us. It is definitely a very, very precarious time in the world. And what does that mean over the longterm in terms of the Overall Health of the economy, the global economy, and the Overall Health of the political environment. Adena, thank you very much for coming in. Thank you. Adena friedman. Good to see you. Thank you. Already here. It is a pretty easy trip. An easy trip. Has to make sure shes ready to go to come on with us. Still to come, results from Morgan Stanley. Plus, congressman jim jordan failing to win the House Speakership on his first bid. Just getting started. One. 15, 20, maybe. Well talk to former House Speaker Kevin Mccarthy who knows something about that. And United Airlines Ceo Scott Kirby on the airlines Third Quarter results and the outlook. Stay tuned. Youre watching squawbok x. This is cnbc. And were at the nasdaq. A competitive advantage. Its raising capital to help companies change the world. Opportunity is making the dream of Home Ownership a reality. And driving the world forward to a Greener Energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. At ice, we connect people to opportunity. All right, Morgan Stanley results are out. Leslie picker has those numbers. Leslie . Hey, becky. Here what i see, a top and bottom beat on the top and bottom lines for Morgan Stanley, reporting eps of 1. 38 per share. Thats about 10 above estimates for the bottom line. Revenue coming in above consensus as well at 13. 3 billion for the quarter. And looking at its individual businesses, institutional securities came in around 5. 7 billion. That beats consensus of 5. 37 billion. That was lower, though, than the same quarter last year. Banking, lower, which we have seen across the street for the last few quarters now. Banking came in Equities Trading higher at 2. 5 billion. Fixed income coming in at 1. 9 billion, which was slightly down from the year a year ago. Global Wealth Management business, a slight miss at 6. 4 billion versus estimates of 6. 6 billion. The margin 26. 7 and a quarter. Investment Management Revenue was 1. 3 billion, which was up 14 from a year ago. Although a slight miss relative to consensus. Operating expenses for the quarter, a little under 10 billion, which was slightly below what the street was expecting here. And ceo james corpsman talking in the note about delivering solid results while the market environment remained mixed for the quarter. Guys . Okay. Just trying to see the characterization here. Profit shrinks as deal slump lingers because stock is down about 3 . Well look more closely at that. To our next guest, a race to find a new speaker of the house continues. Our next guest knows this all too well how difficult this race is. Joining us now, california republican, thats crazy enough, almost an oxymoron, and former speaker, congressman Kevin Mccarthy. Congressman, it is good to have you on this morning. Welcome. You are welcome. You know about wrangling, about whipping, all these things. The he lost 20, talking about congressman jim jordan. He lost 20 the first time. The betting is that he could lose more on this next one because there were certain people that said they would go once, but maybe not after that. Do you know anything that we dont know . What do you expect . Look, it is a difficult job to win, even a harder job to govern. Think about for one moment why we are here. Voting to keep the government open was the right job to do. Could you imagine what the world would look like right now if we were not paying our troops, like, we have chaos. The chaos was created by this crazy eights that are led by gaetz and every single democrat. So now they voted to stop one branch of government, were electing a new speaker. Jim jordan is prepared to do that job. I lost about 20 on first round too. Coming into the second round, the thing i would look at, making sure that vote number goes up. If he can hold the votes and the number goes up, i think he can get there. I believe thats exactly what will happen today. There is three factions, i think. People that wanted congressman scalise. People are still voting for you. And then there is people that are in districts that biden won and i guess theyre worried about, as they always are, every two years, worried about getting reelected. Those are three different factions. Ill point one thing out, former speaker, that is that i think you got 96 . If jordan doesnt get to 8, if he doesnt get that low, and you still would be, like, you would be the person that had the most votes. Is there any chance that you would be the default candidate and say, look, hes still got 96, maybe we leave gaetz and, i dont know who are his hardest deadenders, are there three other ones . What if you got the other four . You could theoretically get back in. Yeah, there is not very many occupations in the world you get 96 support and somehow you are thrown out for that. It is unique. But also, got to think, every single democrat voted to shut down one branch of government. This is something none of the leadership in the past, they always fought against this. Not to do that, to be able to continue the continuity of government. Fish got to swim, birds got to fly. I like mixing metaphors, hot butter through a knife. Thats good. Lets talk about whats really going to happen. How about mchenry . Should we do that . Should we make a special exception, let him do something for six weeks or two months . I think you you give jim the opportunity. I went 159 r rounds. Hes got one round. He spent time talking to a number of people. Lets see as we go here. After 9 11, how it works is and why mchenry is there, i selected mchenry if something was to happen to the speaker, you select who would be speaker pro tem, but i always believed whoever you were selecting as speaker pro tem would be able to do the job until you elected a new speaker. You want the continuity of government. Unfortunately it was the democrats who went out at the beginning and said this person does not have the power. We want to make sure government can actually work. We kept government open. But unfortunately gaetz and the crazy eight decided that was the wrong thing to do. Can you imagine Border Patrol agents, those who are in our military sitting on the Aircraft Carriers have to defend what is happening in the world today, but wondering if theyre going to be able to pay their rent or car payments . This is where we currently are. And i believe that we can get this done, get back on track to be governing for the American People. Kevin, you had to deal with leading this congress and trying to figure out how to govern through all of it. What are the back room deals that are likely to be cut . We have been reading about stuff about jim jordan taking a hardline and trying to do difficult negotiations. Is there some sort of a way he can lure in some of those voters or is there an outreach to the democrats to convince them to get rid of the rules that would allow one member to call for the speaker to be vacated in the speakers position to be vacated . I dont think the democrats they like this chaos. They voted for that rule. They apparently like to keep that in. Look, each member wants to come in and look at the speaker and have an understanding of what theyre able to do. Are there some members that ask for things, just personally for them . They want some office space, Something Else . A lot of them will ask that. Ill tell you at the end of the day there is not places to give away. What you have to find if you want a team that can govern is a team that is ma focused on amer first. There is talk, i gave something away in the process. That wasnt the case. The rule package i put forth was the same rule package that we ended up voting on except instead of five people could move a motion to vacate, we could go to one. Look what we were able to accomplish. You talk about from hr1, to the debt ceiling, cutting 2 trillion, doing work requirements, you could achieve a lot if you worked together. Right now i feel were very broken and so we got to find that ability to bring us back, you got to give jim the opportunity to do that. And i think people are frustrated in a number of different ways because of these eight. Theyre expressing that. But i think at the end of the day if youre able to bring them all back, you can be strong in getting the rest of the work done. The democrats are mad at you for a lot of different reasons. I know that. But you are considered to be much more centrist than congressman jordan and you had 15 rounds of voting. I dont know whether this happens because even some maybe some moderate republicans would be worried about that. I dont know whether he gets to where you got. What if, you know, democrats finally figure out maybe the devil they know is not as bad as the one around the bend . Do you think there is a deal that could be made to get rid of the one vote to vacate the speakership and that do you see any path to where you could be the default candidate . I asked that earlier and you i have a lot of democrats who come to that has remorse, that said they would support. I think the democrats will remove the motion to vacate if theyre in power. But i think they like to keep it and create the chaos now. The one thing, really, the democrats had a meeting, their main purpose to vote to get rid of me was ever since ive been leader, we have one seat. We won five seats in california. We won five in new york, we won in oregon, we won in arizona, places nobody else. We expanded this party, elected the most women ever for the republicans, the most minorities ever for the republicans. So, i mean, the conversations they had directly was theyre making a political decision, nothing about governing. They wanted to make sure based upon the ability to win, based upon the ability to raise resources, they thought taking me off the table that somehow would help them win the majority. They would rather bring chaos to this country than govern. Thats a real concern to me. I had the ability to move a motion to vacate against nancy pelosi, but i never would. I dont believe thats good for government. How much damage is done to the party at this point . The reason i ask, we had Steve Liesman on earlier with the latest survey. And you look at former President Trump, and the headlines we had. He was up over biden by 4 . After all was said and done, he is still up. Im wondering, no one likes watching republicans fight with each other. But im wondering whether, you know there is just so much chaos. Im not sure whether there is anything lasting here or not. If republicans can get their act together this week maybe. Republicans were in no better time from a pure political nature to win the white house, the senate and the house, to gain more seats in the house. We have the best recruits out there. Were ahead in resources by more than 20 million. We have got a president that has brought us inflation. We have got war, again. We have got embassies that have to be evacuated. We have got gas prices at the highest. We have got every element that you look from every issue republicans win on. I dont understand why were putting ourselves in this position when we have the chance to be able to govern in a conservative manner to make america stronger. It is a selfinflicted wound by eight people for personal reasons instead of looking really at the people that they need to govern inside america. Well, if you can only lose four, i just dont see how you will he get those eight and lose other ones that total five or six . I got there, it took me 15 times. It wont be the same as when i was running because when i ran in january, we didnt have rules. Democrats kind of controlled the floor. You had to be able to get off the floor. We control the floor now. We dont have to vote four or five times. I think this next vote is important for jim. I would like to see those numbers grow. Got to be able to hold your numbers, continue to talk to people, and bring people around. At the end of the day, we had a fourseat majority in january and were able to put it together and we were able to accomplish things more than most majorities were able. It is first republican majority to pass a bill to secure our border and we did that with the smallest majority yet. Congressman, if these guys were worried that you call them the crazy eight, i like that, its good. It is the crazy eight led by gaetz. Remember what it is. Yeah. Thats right. Because that rhymes too. But they were worried about omnibus and governing, and no budgets. Were hurdling, because of this, and the chaos, were hurdling toward another omnibus. If they really cared about what they professed to care about, and that is the fiscal the dire fiscal situation that we find ourselves in, were going to end up with another omnibus from this inaction. But, joe, this was never about spending. We cut more spending than anybody in the past. For gaetz, this was all personal, worried about an ethics complaint he had in the last congress. I dont know whats in it but he must be serious. Hes more concerned about putting emails out to raise money online. It is nothing about the country, nothing about the party. What is so unfortunate is the damage hes created, the chaos that has gone on and those who had followed him. So, what we need to do is get in the room, make sure he is no way leading this in any shape or form and put this country back together and make sure this party is able to lead that we had been leading. I just wish we could all get along. Thats not going to happen, though. We do have some not just the what were talking about with the government shutting down, but we need things to do with the border and with israel and ukraine and everything else, congressman. So there is too much happening in the world. There is, yeah. We need to get our act together. We need to make America Energy independent, tackle the inflation we have, secure our border. Im concerned about what type of cells do we have in our country today . As we went to air, we found one way drones coming into attack our bases in iraq. We watched our president sitting in israel wondering looking at a world we havent seen since the 1930s, this new axis of evil from iran, russia and china together. We have got a challenge on our home base to be able to support our allies stronger from energy independence. We got an economy that is weakening in the bases that you report on every single day. This is not a time to play political gamegames. This is a time to sit down, put the country first. I will never give up on this country. And if it costs me my job to make the decision to do whats right to pay our troops, i would do it all again. All right. We havent seen you since all the all that happened. Congressman, good to have you on this morning. Thanks. Thank you, joe. Youre welcome. Former speaker Kevin Mccarthy. Up next, united Ceo Scott Kirby joins il lphebeau. Well be right back. Upbeat music upbeat music pano ai chooses tmobile for business for 5g solutions. Because tmobile helps pano ai innovate, so they can stop the spread of wildfires. Nows the time to see what americas largest 5g network can do for your business. Beautiful live shot of manhattan. Coming up, united Ceo Scott Kirby will be with us in a little bit. At the top of the hour, galaxy founder chairman and ceo Michael Novogratz to talk markets and so much more. Broker shares are lower, the company reporting a more than 40 increase in earnings, and 45 rise in sales compared to a year ago. That companys founder and chairman is going to be with us a little bit later in the broadcast. Look at the futures now. Dow off 100 points. Nasdaq opening down 85 points. S p okloing to open off 20 points. Well come right back. The first time you connected your godaddy website and your store was also the first time you realized. Well, we can do anything. Cheesecake cookies . The chookie manage all your sales from one place with a partner that always puts you first. we did it start today at godaddy. Com youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Its true. Plus, when you buy your first line of mobile, you get a second line free. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Its happening. Welcome back, everybody. United Airlines Says more expensive jet fuel and war in the middle east will weigh on profits. That stock is off by more than 5 . Phil lebeau has a special guest. Phil . Good morning, becky. Lets talk about q4. Your guidance, q3, yes, you beat, but q4, guidance is lower than expected, higher costs. Whats the issue here . Two issues. Higher fuel costs since the even excluding fuel. There is cost pressure everywhere in the industry. Two things driving that. One is much higher labor costs than any of us expected at the start of the year. The second is all the supply chain challenges impacting everyone, engines, spare parts, air traffic control. This quarter were taking 15 fewer Aircraft Carrier deliveries than we were expecting. But we were expecting those to be we have the expenses with those airplanes but arent producing the capacity. The supply chain causes cost pressure for all airlines. Speaking of capacity, how much is the overcapacity, especially on the lower end, with the lowmargin carriers, the lowcost carriers . How much is that distorting the market overall . I wouldnt describe it as overcapacity. To me the most remarkable statistic this quarter is probably united and one other airline in the country, out of ten publicly traded airlines, two will account for 98 of the Revenue Growth this quarter and over 90 of the profitability. There is a Seismic Shift in the strung chur of the airline industry. Thats changing. The revenue Business Models are succeeding, but thats putting pressure on everyone else. What happens with the Lowcost Airlines . With united doing what were doing, a great product, its a much better product, were able to accommodate that demand. The other thing weve done is with product segment, we have the base economy working well. We have revenue diversity. Within the industry, i hear from other executives saying, look, something has to change here because you cannot get as much capacity as weve seen on the lower end without something eventually breaking. Its already broken. Two airlines will be about 11 profit margin. Were 15 to 25 margin points, not basis points to, ahead of the lowcost guys. It has broken on the low end. Its just a matter of time. They have to change significantly in my view to survive. That is already happening. I dont know the exact timing. Thats on its way to happening. Joe has a couple questions. Joe, go ahead. Scott, it almost sounds like its labor costs which are we heard about tel aviv, and you are the biggest carrier, i think, to israel. Im trying to understand that. So, capacity goes down when youre not flying there, and maybe some other places. Yeah. Therefore your fixed costs are a bigger percentage when you have less capacity paying for, you know, generating revenue. Fuel costs are always all over the place, but it sounds like youre saying that labor costs across the board are much higher. I look at your stock price, and something is going on there that we didnt understand. Yeah. So, look, on all that, first, israel is a big impact, but its transitory. You know, essentially its 2 of our capacity. We have most of those costs that are set in the short term, but theyre not set over the medium term. If we were going to fly to israel, wed fly airlines to other places. Thats a transitory issue. Labor costs are higher across the board in the industry. At united, were mostly able to we have been able to pass that on to the consumer. Just take one step back. Its not reflected in our stock price, trading four times earnings for this year, but we also, if you went back to the start of the year, were going to wind up this year, even with everything thats happened with israel and higher fuel prices in the fourth quarter, well earn double what the consensus was at the start of the year. We say the world is developing almost like we thought it would, both for united and for the rest of the industry. That development, frankly, the stress thats happening at the low end of the industry, is going to lead to changes in the industry in a restructuring thats going to leave us in a much better sustainable, much more structurally profitable industry. Do you think those lowcost carriers will have to raise costs . Im trying to follow what youre saying. Its broken at the low end. Theyll have to raise costs, and that means more profit for the rest of you . Well, i think that consumers have voted. As long as united has seats in the market, people are not going to fly frontier or spirit. They have to change the Business Model to make it attractive for customers or theyll go out of business. In terms of the consumers, bookings were stronger in august and cement. Are you seeing any slowdown in the consumer at all . Were not. Second quarter, Third Quarter, fourth quarter, again, its a little different at united, there are two airlines with 98 of the Revenue Growth, if youre in the 2 , it makes it difficult. United is strong. Scott kirby, ceo of United Airlines. They posted better than expected earnings but shy of expectations for q4. Thats the guidance at this point. Thanks, scott. Coming up, well talk about all things crypto. To good morning. President biden landing in israel amid an active war with hamas, biden commenting on yesterdays deadly hospital strike in gaza, saying it appears militants are to blame. Another big morning for earnings. New results out from Morgan Stanley, Procter Gamble, and insurance giant travelers. Well bring you all of the highlights straight ahead. And bitcoins wild ride. It was up, it was down on an apparently false report of an approved etf. Well talk about whats next for the cryptocurrency with investor mike novogratz. Well talk macroeconomics and everything else. The final hour of squawk box begins right now. Good morning, and welcome back to squawk box on cnbc, live from the nasdaq. U. S. Equity futures are in the red, a little bit of selling pressure this morning. You can see down about 80 on the nasdaq, 17 on the s p. Treasury yields once again kind of casting a pall over the markets. You would think with the 10year near how long its been, i think its 2006 we had been saying to for the 2year. The 2year. We had been saying 2007. But whos counting. 5. 18 on the 2year. Crude has kind of been well behaved, but when that happens, it makes you wonder about the global economy. If its not a supply issue, maybe its a demand issue. 8 88. 50 is not cheap. Morgan stanley beating profit and revenue expectations for the Third Quarter. Betterthanexpected trading revenue helped the banks results, although the profit was down 9 from a year ago. The stock is down by about 2. 9 . Then you have consumer giant Procter Gamble beating expectations with its latest quarterly results. Volumes were down for the sixth straight quarter, but the shares are higher here. A lot of that is because of pricing power. Theyve done well with that. Stock up about 1. 8 right now. The ceo, john mueller, joined us earlier on the show oop oom. Strong quarter, 7 organic sales growth, Free Cash Flow productivity, 97 . We returned 3. 8 billion to shareholders. It sets us up well. This is the First Quarter of our fiscal year. It sets us up well to deliver against our guidance. Finally, check out shares of insurance giant travelers, a dow component. They beat revenue expectations, but it missed pretty badly on the bottom line. The culprit there was travelers looking at some big catastrophe losses during the quarter. That was because of a lot of strong storms across the United States. Its pretty similar to how things played out in the last quarter too. Higherthannormal catastrophe losses, big storm, winddamage, hail damage. That can happen even when theres not a hurricane or tornado that takes place. It did do better with fixed income. The money they were making on their portfolio was up pretty significantly. The stock is off by about 0. 7 right now. A busy week for bitcoin. Close to 30,000 on a report that u. S. Regulators had approved blackrocks application for a bitcoin etf. Then blackrock, if you remember, denied that report. The publicist retracted it. Bitcoin still up about 6 this week. Joining us right now with more on that, mike novogratz, galaxy founder and ceo. Mike, start with this report. Lets start with all of the excitement hype i dont know what about the fact that not just blackrock but so many others have attempted, at least, or have applications in to try to get a bitcoin etf going. The question is whether, just because theyre asking, is it going to be approved . It will get approved. Were partnered with invesco on an application. We think it happens this year in 2023. All the indications of dealing seemed to be heading in the right direction, and thats, you know, from mike, though, because i dont want people to people are going to say he owns a lot of bitcoin, he wants this to happen, obviously. What would you pinpoint and specifically suggest that youre seeing around the approval process that is somehow different today than it was a year ago than it was two or three years ago . The most significant piece was the s. E. C. Lost in court, right . The judge said, what are you talking about, sec . You have a futures etf, and youre saying you cant have a past etf. That makes intellectually zero seasons. I think that put the sec on the back foot. I think gansz ler needs a win. Theres a tremendous amount of pressure to do something that is rational. The American Public wants this. Blackrock is the largest asset manager in the world and is out publicly saying were going to get this done. I cant talk specific about conversations that guys are having. You know, thats on the invesco side. But talking to all the other people, it just feels like the dialogue with the sec is all heading in the right direction. When you say the dialogue with the sec, have you seen a shift, a fundamental shift in the way the sec anecdotally, i imagine, would have to be the only way youd know this, has changed the approach to thinking about this in light of that lawsuit . Which is to say, lena khan has lost lawsuits before in her agency at the ftc. That hasnt shifted the way she thinks about antitrust regulation in the United States. Just the public filings back in court and the comments youre reading, peoples comments are much more constructive. When you go to the comment period, what theyre asking about all seems much more specific than general. That seems to be a good sign. Well see. I dont have a crystal ball. This is my intuition. Right. By the way, do you have any thought on what happened this week and how that report came about . I know that theyre planning to investigate how the report was written. But some people are anxious or worried theres manipulation at play. The last day for the sec to file an appeal on that suit came and went, so there was some expectation or excitement. And, you know, telegraph put out an errant report. We were sitting on our desk thinking i dont think telegraph will be the person who breaks this story. I think the sec probably has other sources if they want to break a story. So, i was a little skeptical myself. What it does tell you is the market will head higher on any positive news, right. Youre going to have invesco salesforce, cathie wood salesforce, all out selling bitcoin. Bitcoin has always been an instrument that is sold, not bought. Its getting people in the first time, explaining to them what it is. I think by far the most bullish thing that happened was larry fink on tv saying, dont worry about that rumor, bitcoin is going up because people see it as a stored value and it has a flighttoquality asset. Thats the largest asset manager in the world. Its no longer talking about why it works or how its important. Its just a recognized macro asset. Thats a huge psychological shift. Do you find it strange, odd i dont know. We watched for many years larry fink saying bitcoin was not a thing, would never be a thing, stral banks would not allow it, regulators would not allow it. And now him becoming an advocate of it at the same time he is trying to build a business around it. I think he did his homework, he spoke to a lot of guys in the community. He looks at the state of our fiscal Balance Sheet in the u. S. And abroad and was convinced it was right, then decided to build a business around it, right. Dont get it backwards. Youre not going to build a business on something you dont believe in. So, you know, the bitcoin term is orange pill. He got orange pill. That is happening all around the world. You look at the richest man in pennsylvania, hes a bitcoin believer. The Richest Woman in massachusetts, abby johnson, is a bitcoin believer. These are not flights. These are people that run big, serious businesses that have done their homework and believe in bitcoin as a stored value for a place where populism was taking over and were running 25 , you know, fiscal spending when we should have been running 20 . M we have a fiscal situation in the United States that is a debacle. Next year, the total fiscal, you know, issuance is 6,000 an american. Thats why the bond market is selling off. Speak to, though, the flow to bitcoin but as it relates to what were seeing both happening in the middle east or seen happening to the 10year, the 5year, how you think all of that impacts bitcoin. Because for a very long time, people thought if inflation or rather Interest Rates werent going up, or if they were going up, that would be bad for bitcoin. Yet, here we are. Listen. That tells you theres two vectors in bitcoin. One is adoption, and the other is the macro. High Interest Rates are not good for bitcoin, theyre not good for gold. The curve is saying were losing faith, were losing trust. And, you know, youre seeing the curve is steepening. It will be at 150 basis points positive from whatever it is minus 25 right now. Just look at the 30year chart. That tells you at one point the economy slows. Now, waiting for a slowing economy is like waiting for godot. But the 2year at 5. 25, it doesnt have that much more downside, right, so youre seeing people selling the back end. If that front end starts going, if that 2year gets to 4. 75, 4. 50, youll see bitcoin a lot higher. Mike, always appreciate your perspective on all of this. Thanks. Thanks, guys. Coming up, the latest headlines from israel and a conversation with form toer undersecretary of defense. And later well talk about americas response to the israel hamas war in campaign 2024 with South Carolina senator m ottisct. Here in hawaii there is always time. Theres time to spend with family, time to enjoy with friends. Theres always time to listen or lend a helping hand. Here we have all the time in the world, but no time to waste. Welcome back to squawk box. President biden meeting with israeli Prime Minister Benjamin Netanyahu in tel aviv today. I wanted to be here today for a simple reason. I wanted the people of israel, the people of the world to know where the United States stands. Biden saying that, based on information hessing, it looked like yesterdays hospital explosion in gaza was the fault of palestinian militants. The Palestinian Health ministry has blamed an israel air strike, saying 500 have died. Israel saying a failed rocket launch by the militant group was responsible for this. Regarding hamas, biden saying that the group does not represent all palestinians and brought them only suffering in response to the hospital explosion. A meeting between biden and regional leaders was canceled. Michele flournoy is the former un undersecretary of defense for policy in the obama administration, and cofound er of a company that owns a majority stake. Good morning. Good morning. Who do you believe in this whole situation . Well, i think from what ive heard, all the intelligence suggests that this was not an israeli attack. This was the result of whether it was an accidental you know, an errant rocket from Islamic Jihad or an actual operation to create this horrible situation and to put pressure on israel. So, i think its a classic case of, you know, information operation. How does this particular issue get resolved in the minds of the public and the world . Is there intelligence and information that will ultimately get presented by some government or governments that will demonstrate one way or another what the answer is . Right now we have a situation that has really inflamed the situation even further now. We have competing versions of the truth. I think theres tremendous pressure on both the israeli and the u. S. Intelligence apparatus to reveal to declassify information and share what they know, you know, share, whether its tracking the trajectory of the rocket, whether its rocket debris, et cetera. We may never know, but to the extent we have information, i would hope it would be made public. When you think about the various permutations which all of this shows, what does the next couple weeks look like, the next couple of months . I think what we can expect soon after President Biden departs is some kind of a Ground Invasion into gaza by the Israeli Military with air support to try to focus on taking out the leadership of hamas, their critical infrastructure, their resweapon and capacity to launch future attacks. I think that will take weeks, if not more. But i dont think well see a longterm israeli occupation. Israel has had that experience before. They dont want to repeat that again. The real question that nobody has an answer to yet is, once they degrade hamas or even destroy its current capability to launch attacks, who governs in gaza . What happens in that situation . And my hope is that this will be the impetus for the arab states, the international community, to come together and try to address that question. Do you think a Ground Invasion can be done in a way that is surgical and in a way the Global Public ultimately supports . I think they will make every attempt to make it surgical, but in that environment, no. I mean, this is the worst urban combat environment in the its a warren of alleyways, small buildings, houses, many of which are boobytrapped, hundreds of miles of tunnels underneath the ground that hamas uses. So, its the worst possible situation to go into. Do you see iran getting more directly involved anytime soon . I think at the moment iran is milking this for all its worth in terms of putting prshg on israel and condemning israel. I dont see them wanting to open a second front, first of all because Lebanese Hezbollah would, i think, earn the ire of the lebanese population if they were to start a war with israel across the northern border. And i think iran doesnt really want to come into the war directly and suffer any cost itself. How about they say hezbollah cant decide on their own to do it. And i think even hezbollah is hesitant. That said, none of these sides communicate well, understand each other well. The risk of miscalculation is very, very high. The risk of one side or the other misinterpreting action across the northernborder and having that escalate is very real. I think everybody is worried about the potential for a broader war, but even without that, you are talking about inflaming populations around the globe. Yes. Absolutely. And tensions rising to crazy levels. Absolutely. I worry about additional terrorist attacks on israel, where its coming from the west bank or from other neighboring states. What do you think about the relationship between israel and saudi and where that sort of sits . Just to contextual itz another piece, a number of ceos from the Biggest Companies in america, are expected to be flying to saudi sunday night for their financial conference under the guise of mbs, who runs this conference. A number of them are questioning whether they should be going. I think phones have been ringing off the hook from ceos, should we go or not. Should they go or not . I actually think they should go because we are hearing quietly from the saudi government that they dont want this to be derailed. They want to renormalize the situation with israel, and they want those discussions to get back on track as soon as possible. Obviously, now is not the moment. Hamas was clearly trying to disrupt this whole normalization between israel and the arab states. Saudis actually want to pick that back up in the future. And i think they one of the signs of that is theyve allowed some opinion writers in their own media to actually write articles that were very critical of the hamas attacks. So, i think theres still an open window with the saudis, and i think we want to encourage that. The lip service now is the i think for now it has to be. But i think that one of the things i think will be very important is getting saudis involved in the future of gaza and the potential for a palestinian state long term. Theyve got to be they and other arab states have to be supporting and resourcing any possibility of realizing that. One last question. Sure. You speak to lots of ceos throughout the country. Do you think they should be speaking out more publicly on this issue around antisemitism in the United States, what hamas did, and heres the question using whatever leverage or power they have, for example, as it relates to saudi . All these ceos are going to show up in saudi. You can say that maybe saudi has more leverage over them, because frankly, saudi is our client, ultimately. But are they supposed to use their bully pulpit, whatever that is, to say to the saudis, look, you have to make a deal . Its an individual decision. But i think that the best posture for them to be in is, if they feel compelled to state their views in an authentic way, how they see the situation, condemning any terrorist attacks gen civilians, hoping for a normalized future and more stable future in the middle east, encouraging the saudis to continue to play an Important Role in that, i think thats perfectly acceptable and, you know, hopefully something that we will hear some of them do. Okay. Michele, thank you for coming in. Appreciate it. Thank you. When we come back, a check on the state of Retail Investors with thomas peterfy. And well talk the chaos in washington with South Carolina senator tim scott. Some breaking housing data. Stay tuned. Squawk box will be right back. Only the sleep number climate360 smart bed lets you both sleep up to 13 degrees cooler or warmer on either side, and at your ideal level of comfort. Your sleep number setting. And now save up to 500 on our new sleep number smart beds. Sleep next level. Shop for a limited time only at sleep number. Welcome back. My vocal cords are i scared you. Admit it. You did. Were just seconds away from september Housing Starts. The futures are down about 65 points or so. The nasdaq down 73. The s p is down a little bit. Lets look at the 10year. Thats at 4. 84 . Mike santoli, you have some numbers in chicago for us. What are they . Yes. Housing starts, joe, for the month of september. Interest rates have been hurting housing. 1,368,000, thats the best since july. Last month, 1,283,000, that was the worst level going probably back to june of 2020. I havent seen a revision yet. So, were basically up in the vicinity of 7 on Housing Starts for september. If you look at the permit side, which has been running a bit stronger, as we need, of course, new houses and also need Interest Rates to be more affordable so people can afford them, 1,743,000, definitely a smidge better than we were expecting. In the rearview mirror, we have a revision that was already established at 1,541,000, which, by the way, in complete contrasts to starts, was the best since october of 2022. That is a deterioration of a little over 4 . If you look t at the survey this morning, they claim the 30year fixed mortgage is 7. 70 . Bankrate yesterday had it 7. 9 . Its obvious the dynamics are working against housing. Another issue if youre paying attention to Interest Rates, everything but the longest maturities yesterday made a new covid cycle highyield close. The previous 2year note had been 5. 18. Obviously, we closed higher. Were at 5. 19. Were down a couple basis points. And that level was 4. 81 for 10, currently trading at 4. 83. Thats down one. 30year bonds did not. They needed to close 4. 98 or higher yesterday. They failed to do so. Were really splitting hairs here. Many looked at retail sales yesterday, joe, and said, okay, thats better than expected. I dont know, bam, is emeril in the kitchen . These numbers to me sometimes dont add up. We did see yields move higher, especially short maturities yesterday, because maybe that brings the fed a little warmer. For the most part, many think the recent jump in Interest Rates has more to do with debt, deficits, and maybe what lies ahead with regard to Japanese Monetary policy. One quick note, if you look at Housing Starts now and you consider that in may of 2018 the Highwater Mark for 11 years was 1,357,000, which stood until 2019, my point here is, as slippery and downtrodden as starts are, they sort of kind of fit into what we were looking at precovid outside of the very last month of 2019 and obviously what happened in 2020. Back to you. Whats the next big data point . Its impossible for you to predict, but, like, should i be sleeping soundly tonight, for example . What about next week . What should i worry about next week . Whats coming up that could give us that next leg up in rates . We get our first look at Third Quarter gdp next week. That will be important. But in my opinion, i would Pay Attention to the bank of japans next meeting. I really think that theres much context with regard to the weakest link, the most stimulative large economy and what theyve been doing to keep their currencies weak, of course, through manipulation of their Interest Rates and yield curve. That will slowly have to come to an end, and that is definitely going to put more upward pressure on the entire area of Interest Rates. I think thats going to contrast with the lingering strength in the labor market and retail sales. In my opinion, the runway is going to be running out at some point. Im amazed as everybody else its lasted this long, and i think ultimately in four or five years when we look back, maybe some of the reasons will be a little more clear than they are. Remember that last like, japan barely did anything with the range, and we remember what happened. Rick, thank. Steve liesman joins us now with more. Money never sleeps, pal. You have to be awake. Its on the other side of the world, steve. Things can happen anywhere, anytime. And it would affect us right here. But, joe, i can tell you, having talked to foreign trader, they hate the idea they have to wake up at whatever time to get the u. S. Jobs report. They say theyll be happy once the trade in india is not reliant upon what happens in the u. S. We heard how global the whole thing is. M these are good numbers for housing. I do see, by the way, a little bit of movement upward in Interest Rates. I guess rick and i fundamentally disagree on the main cause of this rise in rates here. I see it very much as a response to stronger growth. It looks like every time these stronger numbers come out, the yields do, indeed, pop. Yesterday was a good example. If you look back at the 10year if midjuly onwards, i see it was midjuly was when that retail sales report came out for june, and you had that surge then. Issuance is definitely an issue, but im not saying its the whole issue. If you go back and look at Housing Starts to, say, the 2015 time period, what youll see is we are not far off right now the averages for that time period. In fact, if you go back to 2015 and take it to the pandemic, the average is 1. 2 Million Units at jeannie ahn yule rate. Now were doing 1. 3 million and change. So, it really hasnt fallen that far. What has fallen is existing home sales, and that could be in part because of something that was reported, which is that people are getting help from the builders in terms of buying down or paying down some of the mortgage rates. That may be a sign of where existing home prices are going. Existing home prices, guys, will be more sticky than the builders out there, and they are not yet offering the discounts that would be needed for supply and demand to meet. Ill leave it there, joe. All right. Great, steve. Thank you. So, dont sleep. Lets get back to the markets and talk about the state of Retail Investors. We want to focus on Interactive Brokers, the company reporting new earnings that beat the streets expectations. But they said customer Trading Volume was mixed. You had options contracts volume up by 18 in the Third Quarter. The stock share volumes, though, down by 22 . That stock right now off by about 3. 7 . Joining us to talk more about it is Interactive Brokers founder and chairman, thomas petterfy. Welcome. Lets talk through some of what youre seeing. You beat expectations on the top and bottom line. Volume was pretty tricky and pretty volatile. How would you describe what you saw during the quarter . So, the stock volumes had been going down for a while, but at the same time, options volumes had been rising. All in all, volumes had been trading up about low Single Digits. What explains whats happening with Retail Investors . Why do they not want to trade individual stocks but they want to do these options . Is that just tied to volatility in the markets. Well, theres been confusion in the market, is it about to be a bursting of a magnificent bubble. People are on both sides of this situation. So, people have large, unrealized gains in the mag nave sent seven stocks. They are not going to liquidate them, but they are Trading Options around it. So, you know, especially the options become extremely popular, and they are trading them by the barrel, so to speak. Whats more profitable for you . Do you make more money on an options trade than you do on an individual stock trade . Yes. They make more money on options because option commissions start at 65 cents. They go as low as 16 cents. Most other brokers are staying around 55 to 65 cents depending on volume, of course. Sorry. Go ahead. Its definitely more profitable for brokers than stocks. Customer accounts were up 21 to 2. 43 million. Where did you get those new customers from . Were you stealing market share . Are these people who are coming back into the markets . What happened . Our customers come to us from all over the world. Theyre basically the only broker that is serving customers all over the world in 200 countries. Trading generally is not very well accepted yet in many countries around the world. So, there is a huge path for that. You have been pretty outspoken in the past about geopolitical events. Obviously, youre an entrepreneur, and you came over and created a huge company. But you look to whats happening in ukraine, and you look to whats happening in the middle east right now, and what worries you about these situations . I am most worried about china taking van of this situation and going into taiwan. Thats my greatest worry. I think people look at whats happening in the middle east and are concerned if it expands from the onefront war right now between israel and hamas, that a similar situation kind of jumps out, that if this expands, thats the case, too. There are some worries. Theres china and this middle east situation becomes a Public Relations war more than a shooting war. And that is going to be a very difficult situation for israel. Anything that Business Leaders can do at this point . Or do you think this is kind of beyond the Business Community . No. I, myself, would not get into it, no. Im sorry, thomas . I wouldnt get into this. Its a very touchy situation. Yeah. I agree. Better to stay out of it. Lets stick to what were seeing in the markets right now, which is your field of expertise. Go ahead, thomas. Yes. We had many customers in israel, but we also have customers in the other middle eastern countries. So, you know, its a gray area. This is not good for people. Its not good for business. Its not good for the world. Its not good for anybodys future. Its a terrible situation. And the sooner it gets peaceful, the better off we all are. Lets talk about your concerns when it comes to the market. The state of Retail Investors at this point, where are they . How do things stand . So, you know, they are basically our customers are not as retailers as the schwabs of the world. There are more professional investors, and, you know, there is to some extent shorts on investors because, you know, when they look at the markets as they were yesterday or the day before, our customers are they are by far many people are short. Given that the s p is trading at 19 times and the Earnings Growth is only low Single Digits, that gi gives you something way above what is reasonable for valuation. The magnificent bubble is going to burst. Thomas peterffy. Thomas, thank you. We appreciate talking to you today. Thank you very much. When we come back, a lot more on squawk box. South carolina senator and president ial candidate tim scott will be joining us on the latest developments out of israel and the u. S. Response to the violence in the middle east. Its been 11 days since the israel hamas war began. Our next guest just introduced a bill that aims to prevent iran from accessing billions of dollars in frozen assets that were made available to the country as part of that u. S. Prisoner Exchange Last month. Nbc news reported last week that a Treasury Department official did tell House Democrats that the u. S. And qatar had agreed not to let iran access the fund. Joining us now, South Carolina republican senator tim scott. He serves on the Foreign Relations committee and isa 2024 candidate for president. Senator, good to see you again. Good morning. Good to have you on squawk box again this morning. I remember the shock, senator. This place has been a thorn in our side and a problem for decades. Absolutely. Sometimes, you know, the idea that we need to engage with our enemies, sometimes that seems like the appropriate tack. Other times, its, like, what are we trying to do when its a country that wants to destroy israel and wants to destroy us . And we mismanaged it in recent years. We have. One of the things that youre seeing in the last couple years is the weakness of President Biden with conflict across the world. You hear his comments. Its a small incursion in ukraine might be okay. Dont attack these areas from a cyber perspective as hes talking to putin. Then you watch what happens with israel. Hamas attacks, the Bloodiest Day since yom kippur. Or we have to stand shoulder to shoulder with no daylight with our allies. The world needs to know that we are loyal to our allies, and we will be lethal to our adversaries. Thats been missing for the last couple of years, and frankly, the hostage payment of 6 billion you know, joe, i said it under the obama administration, when he paid 400 million for hostages, you will only increase the price on every American Life abroad. And now we see 6 billion. Is first misstep is paying a ransom. The next misstem is not realizing you cannot make a good deal to with a bad actor. And iran is a bad actor. 90 of the money that goes to hamas comes from iran. After the attack, hamas thanks iran. Freezing those assets actually will save lives. We must not only stop there. We must go one step further and have the secretary of the treasury, thats why im leaning on this bill, having the secretary of the treasury report on all assets iran has, over 5 million, so that we can target them and then extend, finally, my legislation from may, extend the sunset. We make it permanent. Sanctions on the Energy Sector in iran. They must feel the price. Plenty of blame to go around. Republicans picked a bad time to, you know, be basically unable to fund israel and, you know, ukraine, regardless of ive seen people go back and forth about how much more aid we should give to ukraine. But were not giving ate to anyone, even to israel at at this point, because of this whats happening in the house on the gop side of things, senator. Yeah, absolutely. One of the things i would suggest if i were president of the United States, i would be calling on my party to have a speaker pro tem so that business can be done in the house. Its, quite frankly, 221 members, republicans, we need 218 to choose a speaker. Why dont we get the peoples Business Done by making Patrick Mchenry at least the speaker pro tem so legislation can move so that the funding apparatus that will be necessary to support israel has a path forward. Get it to the senate and let the president sign it. There are things that can be done as a stopgap measure to make sure that the house continues to function. If i remember the president , i would be at the microphone telling the party, lets remember, the road to socialism runs right through the divide in the republican party. Get the peoples house in order. Then i would frankly encourage a changing of the rules. Having 4 of your congress able to eliminate your speaker is probably bad decisions after bad decisions, even into the future. Senator, you, early on, mentioned frequently, as maybe a viable alternative to former President Trump, but i dont know what you need to do. You have a pac. I like the name. Its trust in the mission, but it stands for t. I. M. , so your tim super pac, theyre not going to spend any more money on tv. Theyre going to focus on grassroots, but in explaining why theyre doing it, theyre not even really blaming you or talking about your prospects. You havent qualified for the next debate. Youre maybe in some of the early states youre as high as 6 , but low Single Digits nationally, and your South Carolina colleague is ahead. Theyre just saying at this point, no ones focused on ready for a trump alternative, and this is a direct quote from the cochair of the super pac. Were doing what would be obvious in the business world. Were not going to waste our money when the electorate isnt focused or ready for a trump alternative. What needs to be done . Could we could republicans coalesce around one person if there is a smaller field, and do you need to drop out . Well, obviously, im in for the long run without any question. I dont know i trust senator cory guardner. I chose him to run the super pac. Hes doing a good job. One of the things weve realized throughout the last several days is breaking through any of the media with any Campaign Material is useless. Why waste those resources when you can save them for the end of the campaign when you will have the opportunity to break through . Knowing that and knowing that the number one job that we can do right now is support israel, we know that every news cycle, were going to focus on our job and our responsibility to lead on sanctions legislation, to lead on closing the southern border or at least let us freeze the assets and provide sanctions to the council of the mexican cartels. These are things that i can lead on right now in this challenging time in our nation. Were using those resources when they will count the most in late december and early january, its a good decision. My assumption is that is a decision being made by my super pac. More importantly, making sure that america, the entire nation, leans into support for israel is something we should all focus on right now, because its the only thing thats mattering, and thats the one thing that breaks through in all the news cycles is making sure that america understands that all of our leads should be standing shouldertoshould and backtoback with israel. Senator, do you this is where you get in a tough position. Do you think that this would not have happened under former President Trump . And if you think that, then kind of like a campaign ad for him. Or would you say is there something to the madness of king george to have a regime where our enemies are so afraid because anythings possible from the leader that they dont i mean, there is something to be said for that. Someone can be so unpredictable that theyre afraid to do anything. I dont know if thats a good thing. Or we could have a president who remembers ronald reagan, peace through strength. It works. You dont have to have someone whos volatile to lead our country. You actually do better with someone whos optimistic and positive, anchored in conservatism, who understands the reagan doctrine of peace through strength. I would be that president. Having someone who has no daylight, someone whos not negotiating with iran for a new nuclear deal, someone whos not talking to putin and saying to him, heres things that we wish you would not do in our country, love, the president. We need strong leadership with a backbone that speaks clearly, consistently, and concisely as it relates to the issues and the topics that will protect the American People and encourage opportunities around the world. Sounds good. All these things. Well see whether it starts resonating, senator. We are in crazy times, are we not . We are indeed. We are. All right, well, good luck. Good to have youn aay oaslws, senator. Squawk box will be right back. But if its using untrusted data can you trust the results . Your business doesnt just need ai, it needs the right ai for your business. Introducing watsonx a platform designed to multiply output by tailoring ai to your needs. When you watsonx your business, you can train, tune and deploy ai, all with your trusted data. Lets create the right ai for your business with watsonx. Ibm. Lets create. Welcome back to squawk. A little over half an hour to the opening bell on wall street. Frank joins us now. Morgan stanley, shares moving down about 3 lower despite inline revenue and a beat on eps. Profit was 8 above estimate buzz still 9 lower year over year. Revenues of 938 million, well below the estimate of 1. 11 billion. Wealth management also missed expectations. Again, shares down more than 3 . Travelers insurance moving lower after a beat on revenue but really actually moving higher now. 1. 25 after a beat on revenue but a big miss on eps. Profit more than 30 below estimates, catastrophe losses that led the personal line of business, which generates just about 40 of revenue, to be unprofitable. However, that headwind was expected. You can see right here, shares up over 1 . Last but not least, Procter Gamble shares moving higher this morning. Profit, 6 above estimates. 7 organic growth, that beat estimates. Shares up 2 right now. The fabric and home care business that includes mr. Clean and downy, really, the driver of the quarter. Becky, back to you. Okay, frank, thank you very much. Lets take a final check on the markets right now. The futures have been in the red all through the morning. In fact, dow futures are down by triple digits at this point. Get that loss of about 108 points ahead of the hope. We had some disappointing earnings that came in, including from some dow components, and that could be putting some of the pressure there. Nasdaq down by about 109. S p 500 futures off. Weve been watching yields too. Right now, the tenyear is at 4. 862 . That does it for us today. Join us tomorrow. Right now, its time for squawk on the street. Nooelts good wednesday morning, welcome to squawk on the street, im Carl Quintanilla with sara eisen and mike santoli. Futures under some pressure this morning with bonds yields still flirting with these cycle highs. Oil near 90, the president in israel and the market very sensitive to headlines. Our road map is going to begin with a big day. P g
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